The “Essential Elements” in negotiating debt are usually put into a written and signed contract or a lease or could also be oral arrangements or could be customary terms in an industry that that are understood by all parties. Often a creditor may be more flexible with some elements than others; for example an element like the total amount of the debt may be inflexible to a creditor, but the same creditor may be much more flexible with the time to pay the debt and the interest rate, essentially giving the debt much better terms for repayment Once we determine which elements are “Anchor Elements”(inflexible terms) and which are “Softer Elements”(subject to some negotiation) and which are “Fluid Elements” (subject to a great deal of flexibility) we can know how to negotiate with a creditor.
These Essential Elements in negotiating debts or expenses are as follows:
The question is often how and what to negotiate with business debt and expenses and the answers are often situational and depend on what is needed by the business and what is potentially acceptable for the creditor to negotiate. Below are ways to negotiate debts and expenses that are possibilities but which are are case by case specific:
All business debts can be negotiated as to their terms. Each type of business debt or obligations has terms as to amounts due, time given to pay, interest, additional payments, security or guarantees given to assure payment and other conditions. Generally all or most of such terms are negotiable. The types of business debts that can be negotiated are:
In order to obtain concessions from creditors for business debt there need to be tools with which to negotiate or to motivate a creditor to give the borrower better terms. These tools can be positive motivators (“carrots”) like payments, security, guarantees OR negative motivators (“sticks”) like the threat of non-payment, bankruptcy and/or litigation. Usually before a negotiation starts an evaluation needs to be made as to what is being offered to the creditor to motivate them to give concessions. The business agreements (contracts, leases or other signed agreements) themselves are a place to start to see when and under what conditions can the debtor/borrower pause or stop making payments and/or seek resolution to a dispute in arrangements. Usually ambiguities in agreements or changed conditions can be used to support a position that favors the debtor/borrower.